You’ve been looking for a place to live for months and have had multiple offers turned down. Now that you have a contract, you can start bribing your family to help you move. Congratulations, but when should you schedule the truck? The time it takes for each type of mortgage to close varies more than you may imagine.
Although purchasing a property is an exciting event, there can be stress involved, particularly with regard to the closing date. You can’t wait to settle in and take advantage of your new area, but there are a few things you need to do before you can formally call it home.
One of the biggest factors influencing your closing timeline is the type of mortgage loan you choose. Conventional loans are among the most popular options, but do they close faster than other loan types? Let’s delve into the details and explore tips for expediting your closing process.
Understanding Closing Timelines: A Glimpse into the National Average
According to the latest data from ICE Mortgage Technologies, the average closing time for a home purchase loan in the United States is 49 days. However, this is just an average, and your actual closing timeline can vary depending on several factors, including the type of loan, the complexity of the transaction, and the efficiency of the parties involved.
Conventional Loans: Closing Timelines and Factors Affecting Speed
Conventional loans are widely available and offer competitive interest rates, making them a popular choice for many homebuyers. The average closing time for a conventional loan is 48 days slightly below the national average. However several factors can influence the closing timeline for a conventional loan:
- Loan-to-value ratio (LTV): A lower LTV generally means a faster closing. This is because lenders perceive less risk with a smaller loan amount relative to the property’s value.
- Credit score: Borrowers with higher credit scores typically experience faster closings. This is because they pose less risk to the lender and require less stringent underwriting.
- Documentation: Having all your required documentation readily available can significantly expedite the closing process. This includes pay stubs, tax returns, bank statements, and other financial documents.
- Appraisal: The appraisal process can sometimes cause delays. Choosing an experienced and efficient appraiser can help minimize this risk.
- Title search: Any issues with the property’s title can delay the closing. Working with a reputable title company can help ensure a smooth process.
Tips for Closing Faster: Strategies to Accelerate Your Homeownership Journey
Even though a conventional loan closes in 48 days on average, it is possible to close sooner. Consider these strategies to expedite your closing process:
- Get pre-approved for your mortgage: This demonstrates to sellers that you’re a serious buyer and can streamline the loan approval process.
- Gather your documentation in advance: Have all your financial documents readily available to avoid delays during the underwriting process.
- Respond promptly to your lender’s requests: Time is of the essence, so be responsive to any questions or requests for additional information from your lender.
- Choose an experienced and efficient real estate agent: A knowledgeable agent can help navigate the closing process smoothly and efficiently.
- Consider a cash offer: If financially feasible, a cash offer can significantly speed up the closing process, as it eliminates the need for a mortgage.
While the average closing time for a conventional loan is 48 days, this is just a general guideline. Your actual closing timeline can vary depending on several factors. By understanding these factors and implementing the strategies outlined above, you can increase your chances of closing faster and moving into your dream home sooner.
Remember, communication is key throughout the closing process. To guarantee a seamless and prompt closing, maintain constant communication with your lender, real estate agent, and other relevant parties. By being organized and taking proactive steps, you can speed up the closing process and quickly begin living in your new house.
Closing Time Lines by Mortgage Type
Conventional mortgages are the most common type of mortgage. Based on the most recent data available, it takes an average of 57 days to close in 2021, according to ICE Mortgage Technology (formerly Ellie Mae, the mortgage applications processor).
Federal Housing Administration (FHA) loans take a bit longer to close due to additional documentation requirements. They take an average of 62 days to close.
U. S. VA loans are only accessible through lenders who have been approved by the Department of Veterans Affairs (VA), and they have the strictest underwriting standards. As a result, they take the longest time to close—an average of 66 days.
What Can Delay the Closing Process?
A closing can frequently be delayed by significant changes to your creditworthiness, such as applying for a new credit line or changing jobs. Wait a few weeks for closing if you want to be able to purchase your home, even if you are in dire need of a new auto loan to replace a totaled car or you simply can’t stand your boss any longer. Other typical problems that can cause delays in closing include switching lenders, having trouble finding local appraisers, having inspection-related problems that need to be fixed, and postponing locking in your mortgage rate.